Shocking: Here’s Why Tesla Motors, Inc. (NASDAQ:TSLA) Could Hit $500

By Jing Pan, B.Sc, MA Published : August 28, 2015

Tesla Motors Inc.’s (NASDAQ: TSLA) stock price surged on Thursday August 27th. With the backdrop of a surge in the overall market, Tesla’s shares also benefited from a product review. According to renowned product testing agency Consumer Reports, Tesla’s Model S is the “best performing car” it has ever tested. (Source: Consumerist, August 27, 2015.)

On Thursday, Consumer Reports published a review of the all-wheel-drive Tesla Model S P85D sedan. The report said that the car “performed better in our tests than any other car ever has, breaking the Consumer Reports Ratings system.”

Here’s what happened. The 2015 Telsa Model S P85D achieved 103 points on Consumer Reports’ 100-point scale, effectively breaking the magazine’s rating system which by definition should not go past 100. Since the car set a new benchmark, Consumer Reports had to adjust the scoring system to make the Tesla fit into a 100-point scale.

What’s So Good About the Tesla Model S P85D?

Well, the main change of the P85D is performance. Tesla has been known for making electric cars that are fun to drive, but this P85D takes it into supercar territory. The acceleration is instant, and the car can go from 0 to 60 mph in 3.5 seconds!

Handling and braking also improved from the standard Model S, which was already an impressive car. Moreover, the P85D was more energy-efficient, with its energy consumption equivalent to 87mpg—something no other supercar can even come close to.

Here’s the verdict: “The Tesla Model S P85D is an automotive milepost. It’s a remarkable car that paves a new, unorthodox course, and it’s a powerful statement of American startup ingenuity.”

Note that this is not the first time for Tesla to top the scoring board at Consumer Reports. Back in 2013, the original Tesla Model S scored a record high 99 points. Jake Fisher, director of Consumer Reports’ auto testing, said at the time that the car “performs better than anything we’ve ever tested before. Let me repeat that: not just the best electric car, but the best car.” (Source: Autoblog, last accessed August 28, 2015.)

Tesla’s Stock Price to Soar

As the report spread around, Tesla’s share price surged 8.07% on Thursday to close at $242.99. On Friday, the upward trend continued. At around 10:50 a.m. E.T., the company’s shares are trading 2.31% higher at $248.59 apiece.

The company is about to launch its first crossover utility vehicle—the Model X—this fall. The new vehicle would be more utilitarian, with room for seven adults and two decent sized trunks. Moreover, the Model X will be equipped with rear gull-wing doors, which Tesla calls falcon doors.

Some analysts have said that Tesla’s lineup was so expensive that its market would be limited. The Model S starts at $70,000 and the Model X is expected to price in the similar range. Even after the $7,500 federal tax credit and applicable state incentives, their prices would still be in the premium car category. However, Telsa does have a plan to break into the affordable car business with its Model 3.

According to Tesla, the Model 3 would start at around $35,000 before government incentives. After federal tax credit, the car would cost $27,500, and you get all the running cost savings of owning an electric vehicle. Moreover, Tesla would not compromise on the performance of this less expensive model. The Model 3 would accelerate from 0 to 60mph in 4.1 seconds, and would have a range of 200 miles.

Most recently, Tesla has secured a supply of lithium hydroxide, a key base material used to produce lithium-ion batteries used in its electric vehicles. The company has entered into long-term contracts with mining companies Bacanora Minerals Ltd and Rare Earth Minerals PLC. Note that Tesla is building a huge battery factory in Nevada with the capacity of making 35 gigawatt hours of battery cells. That would be more than all of today’s lithium-ion battery plants in the world combined.

Here’s the Bottom Line

There is even more to come for Tesla; Powerwalls, driverless cars, and who knows what Elon Musk will come up with next time. If you are investing in Tesla, there’s one thing for sure: you are investing in the future.